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Why Cloudera Stock Tumbled Today

The cloud company sees growth slowing way down this year.

What happened

Shares of Cloudera(NYSE:CLDR) crashed on Wednesday following the cloud software company's fourth-quarter report. While Cloudera beat analyst estimates for both revenue and earnings, subpar guidance sent the stock down 39% by 12:30 p.m. EDT.

So what

Cloudera posted fourth-quarter revenue of $103.5 million, up 42% year over year and about $4.9 million higher than the average analyst estimate. Subscription revenue soared 50% to $84.3 million. "In our first few quarters as a public company, we introduced six major product offerings, completed a strategic acquisition, and delivered significant technological innovations," said CEO Tom Reilly.

Image source: Getty Images.

Non-GAAP earnings per share came in at a loss of $0.10, up from a loss of $0.30 in the prior-year period and $0.13 higher than analysts were expecting. The company lost $0.31 per share on a GAAP basis.

Cloudera's guidance for the first quarter of fiscal 2019 was in line with analyst estimates, calling for revenue between $101 million and $102 million and a non-GAAP loss per share between $0.17 and $0.19. But guidance for the full year was a different story. The company sees fiscal 2019 revenue between $435 million and $445 million, well below analyst expectations of $460.2 million.

Now what

Two analyst downgrades triggered by Cloudera's guidance likely played a role in driving down the stock. JPMorgan dropped its rating to neutral, while Deutsche Bank lowered its rating to hold.

A lofty valuation may have also been a factor. Cloudera's market capitalization prior to Wednesday's plunge sat at roughly $3.2 billion. That's more than 8.5 times fiscal 2018 sales, a multiple that bakes in some pretty lofty growth expectations. With Cloudera now expecting revenue to grow by just 20% this year, the stock is facing a brutal reckoning about a year after its IPO.